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Tuesday, 20 March 2012

Detailed Union Budget 2012-13(2)

3.Central subsidies to be kept under 2% of GDP to be further brought to 1.75% of GDP over the next 3 years.

The reforms program initiated in 1991 aimed at, among other things,reducing fiscal imbalances and improving allocative efficiency by minimizing the distortions in relative prices.
Subsidies are an important element of reforms.

The main objectives of subsidies are

1.Remove economic distortions , there by improving economic efficiency and growth.
2. Achieve redistributive objective
3.Reduce budgetary burden and release precious resources .
4.Improve the environment by realigning the incentive structure to favor environmentally sound practices.
Subsidies are different from transfer payments. 

Subsidies are categorized in two types.

1.Economic Subsidies:
     Agriculture &cooperation
     Irrigation & food control
     Power & energy
     Industry
     Transport
     Communication & others.
2.Social Subsidies:
     Education
     Health
     Water supply & sanitation
     Rural housing and others.

Economic Sector subsidies are nearly 5 1/2 times as large as that of the Social Sector

There are 6 types of Subsidies.

1. Cash subsidies: providing food or fertilizer to consumer at lower price
2.Interest or credit subsidies
3.Tax subsidies
4.In kind subsidies
5.Procurement subsidies
6.Regulatory subsidies. 

4.Proposed :Mobile based fertilizer management system; LPG transparency portal;scaling up and rolling out of Aadhaar enabled payment for Government schemes in at least 50 districts.

Mobile Based Fertilizer Management System:

The MFMS has been designed to provide all the information on fertilizers and subsidies. The system will be rolled out during 2012 and will benefit 120 million farmer families.
It will allow the government to set up a mechanism for directly transferring subsidies to the farmers across the country.
Direct transfer of subsidies to the retailer and eventually the farmer will be implemented in subsequent phases. This benefit 12 crore farmers, while reducing the leakages and expenditure on subsidies by curtailing the misuse of fertilizer.
LPG Transparency Portal:

Transparency portal is aimed at providing the citizens of India the information on the number of HP Gas consumers(distributors wise) and the number of refills consumed by HP Gas consumers 
Domestic LPG is a subsidized commodity and the subsidy is borne by the Government and the oil marketing companies
The portal aims at proving information on the consumers who are enjoying this subsidy and their consumption of HP gas domestic LPG cylinders.

Aadhaar enabled payments for government schemes:

APB is a repository of Aadhaar number of residents and their primary bank account number used for receiving all social security and entitlement payments from various government agencies.
This would weed out all fakes and ghosts from the system and ensure that the benefits reach the intended beneficiaries.

Continued.......

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